TOKYO--It's no secret that the Xbox 360 hasn't exactly seduced the Japanese market. Even though Microsoft spent lavishly wooing the island nation, its new platform's December 2005 launch in the territory was largely met with indifference. By contrast, the 360 was nearly impossible to find in Europe and North America for months after its November 2005 launch, despite reports of now-infamous hardware issues.

Nevertheless, the 360 had a substantial head start in Japan. The other next-generation consoles didn't launch in Japan until late 2006--the PlayStation 3 on November 11, and the Wii on December 2. And although the Wii's 25,000 yen (about $215) price point made it the clear favourite for frugal gamers, the 360's 39,795 yen (about $343) cost put it below both the 49,980 yen (about $431) 20GB PS3 and the 59,980 yen (about $517) 60GB PS3. (Both PS3s have since been discontinued in the US, and the 20GB was never released in Europe.)

So how is the 360 faring in Japan one year after the next-generation war began there in earnest? In a word: poorly. Though Microsoft claimed to have sold over 11.6 million consoles worldwide through the end of July, only 1.5 million of those were outside North America and Europe. Indeed, various reports pin the number of 360s sold in Japan as less than 500,000 and as low as 420,000. Nor do the platform's fortunes appear to be improving. For the week ending September 23, 2007, Japanese industry tracker Media Create reported that only 1,687 Xbox 360s were sold in Japan, compared to 10,732 PS3s and 24,992 Wiis.

Microsoft is quick to point out that the Xbox 360 is doing well in other regions, with 6.8 million in North America and 3.3 million in Europe as of July 31. Consequently, the console's success in Japan, or lack thereof, will not make or break the console. Clearly, though, the publishing giant wants to break into Japan, an influential region regarded by many as the holy land of game culture.

OVERCOMING THE XBOX LEGACY So what has Microsoft done wrong? Aaron Greenberg, Xbox Live marketing director, thinks that the problems go back to the original Xbox, which sold poorly in Japan after debuting there in February 2002--nearly two years after the PlayStation 2's debut.

"The feedback we got from the original Xbox console was that people didn't like the black colour and they didn't like how big it was," he told GameSpot. "We worked with the Japanese design team to design the Xbox 360, so the console was designed with a Japanese style in mind. Hiroshi Ogawa, director of the 360-exclusive Infinite Undiscovery, concurred. "The first Xbox was a little big, a little bulky, and in Japan that doesn't go over too well."

That said, Greenberg isn't entirely convinced by the research and the reasons given by the Japanese respondents for not liking the console. He said, "This isn't like a car where you're driving it around town... I don't buy any of that stuff about the colour, to be honest with you. ... We listened to that advice and we made a white console, but then Sony made a black one, and theirs is now bigger [in Japan]. But I think if you have games people want, then they will buy the system."

So what must Microsoft do to court Japanese gamers? "In order to succeed in Japan, [Microsoft] needs Japan-created content, not just a lot of foreign games that have been localized," Soulcalibur IV lead programmer Masaaki Hoshino told GameSpot. Indeed, many developers say that, naturally, there is a bias toward Japanese games in the Japanese market. "People think [foreign games] are difficult and there's no guidance on how to clear the objectives," said Ace Combat 6: Fires of Liberation director Natsuki Isaki. "Now that has changed, and they are much easier to play, but this bias remains among Japanese gamers."

JRPGS: THE KEY TO SUCCESS? Natsuki Isaki agreed with his colleagues, "I personally like games like Tom Clancy's Rainbow Six Vegas, Gears of War, and Test Drive Unlimited," he said. "But I think Japanese players don't want challenging, stressful, difficult games. Japanese players would rather have role-playing games with a slow tempo, where they are led and shown what to do. So, maybe games like Blue Dragon will start to change things. When more of those kind of games come on to the market, then I think more Japanese players will accept the 360."

Indeed, Blue Dragon comes from one of Japan's most famous RPG designers, Final Fantasy creator Hironobu Sakaguchi. The nearly 25-year industry veteran is one of several high-profile home-grown designers that Microsoft aggressively courted to create 360 exclusives for the Japanese market. Though other games developed through the program fared poorly at retail--games such as the Tetsuya Mizuguchi-designed action game Ninety-Nine Nights--Blue Dragon struck a chord with Japanese JRPG fans. In an interview earlier this year, Sakaguchi said the game was on track to double its sales target of 100,000 copies, which, although modest, is remarkable given the 360's tiny installed base in Japan.

At the moment, several Japanese-focused RPGs are in development, including two from Square Enix: the Sakaguchi-designed Lost Odyssey and Square Enix's Infinite Undiscovery. However, Ogawa thinks Microsoft needs to make more JRPGs if it wants to succeed in the territory. "I think in the previous generation that when it was the Xbox versus the PlayStation 2, Microsoft was unable to put out many RPGs," he explained. "They weren't able to put out the type of games Japanese players really play. And the resistance to 360 may be some holdover from that."

THE EARLY ADVANTAGE Given the fact the 360 had to overcome the Xbox's tarnished legacy, one might wonder why any Japanese studios decided to make games for it at all. Some designers say that they chose to work on the console simply because there were no other next-gen options at the time development of their game started.

"We really wanted to develop a high-end game, and the desire to make that kind of game was more important than the market to us in the beginning," said Infinite Undiscovery producer Hajime Kojima. "The PlayStation 3 wasn't out at that point. Also, from the business side of it, it was originally a Microsoft and Tri-Ace project, so obviously Microsoft was going to push for it to go exclusively to the 360."

Natsuki Isaki agreed, saying that the 360's early start is one of the reasons that Ace Combat 6: Fires of Liberation went solely to Microsoft's platform. He said, "One reason for choosing the 360 is that it was the first next-gen hardware to market. There was a big gap between Ace Combat 4 and 5, and we wanted to get the next phase out as quickly as possible, and the 360 was the first hardware available."

Hoshino adds, "The main thing driving us is that we want to create content to please the fans. And to do that, we want to have it available on as many platforms as possible to reach as many fans as possible."

INTO THE WEST...AND BEYOND RETAIL Now that the PlayStation 3 is up and running, does this mean that development in Japan for the Xbox 360 will dry up? Unsurprisingly, Greenberg doesn't think so. "Square has announced two more titles for the platform," he said. "There's a new Final Fantasy XI expansion that has been added on. Capcom, Namco Bandai, and Konami have all brought exclusive titles to our platform. I think as we continue to grow our install base, we'll continue to sell a lot of games around the world, and we'll get more and more publisher support."

Also, some developers said they liked the idea that the 360, although unpopular in Japan, has a good install base in North America. Indeed, the popularity of Capcom's Lost Planet: Extreme Condition showed many Japanese developers--including the increasingly West-focused Square Enix--that the 360 can give their games a global audience. "The worldwide aspect is definitely there," Ogawa confessed. "Also, in terms of the next-generation consoles, the PS3 isn't quite at the level where the PS2 was, so if you're choosing a next-generation console, it's not such a great difference between the PS3 and the Xbox 360. We foresee that the Xbox 360 will expand."

Other than concentrating on nabbing more Japanese-friendly games like Blue Dragon and Infinite Undiscovery, what else is Microsoft doing to try to grab more market share in the region? Phil Spencer, Microsoft's first-party publishing general manager, said that the company is doing a number of things, including investing in projects that do not have a North American focus. He explained, "It is true that outside of North America and some European markets, the method for creating and nurturing community and their appetite for subscribing or purchasing content takes very different steps. You see us today focused with shipping very core titles like Blue Dragon, Lost Odyssey, but as you can imagine, our future endeavours go beyond simple Xbox 360 shrink-wrapped products."

Greenberg adds that he believes the recently announced spate of Japanese-developed Xbox Live Arcade games will help the 360 gain surer footing in the Japanese market. "A lot of small- and medium-sized publishers that make niche games more targeted to the Japanese market are now actually coming on Xbox Live Arcade," he said. "We've had the Capcoms and the Namco Bandais on Arcade, but now we're seeing increased support from [publishers] like Hudson. And then you get into studios like Treasure and Exit and all these other companies that really haven't traditionally had a large presence in the Western markets. They're focusing on Arcade because it's a great platform for them to make and sell original-style games that appeal to not just Japanese consumers, but consumers around the world."

THE FUTURE Greenberg says he's happy that the future looks rosy in Japan for the console and that the next-gen war is far from over. He told GameSpot, "If I felt like where we were with the 360 in Japan was impacting our ability to get games out of this market, I would be more concerned. But we're seeing more publisher support here than we've ever seen before. We had more than twice the titles PS3 did on the Tokyo Game Show floor this year. We've got 300 titles. We have a larger install base. We outsell Wii and PS3 combined from a game standpoint. So I feel good about where we're at."

However, even Greenberg admits that for a new entrant and outsider such as Microsoft, the Japanese game market is a tough nut to crack. "It's a very mature market," he confessed. "People have owned consoles here for many, many years. People from 8 to 80 play video games here. If you go to the arcades, you'll see adults chain-smoking in suits playing games. It's wild."